Tag: Thailand

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Zipmex pauses withdrawals “until further notice”

Zipmex, a digital assets exchange with operations in Singapore, Australia, Indonesia and Thailand, said on Twitter that it “would be pausing withdrawals until further notice.”

The Singapore-headquartered company cited a “combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners.”

Zipmex is not the only crypto exchange that has run into difficulties amid a global sell off in crypto markets. Crypto unicorn Babel suspended withdrawals in June, while Celsius, one of crypto’s biggest lenders, filed for bankruptcy a week ago.

Vauld, another Singapore-based crypto platform, suspended withdrawals, trading and deposits due to financial challenges earlier this month.

TechCrunch has reached out to Zipmex for comment and will update this story if we hear back from them. Reuters reports that in a livestream on Wednesday evening, Zipmex Thailand CEO Akalarp Yimwilai said its office’s difficulties were because of problems at Singapore-based Zipmex Global, whose partners Babel Finance and Celsius, were experiencing liquidity problems.

Zipmex, which aspires to build the Asia Pacific region’s largest digital assets exchange, raises $6 million led by Jump Capital

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As Coinbase falters, Binance.US is waiting in the wings

As the largest publicly traded crypto exchange in the United States, Coinbase has become something of a household name. But as the going gets tough in the crypto markets, the company seems to be fumbling the bag, leaving it vulnerable to competition.

Coinbase’s stock price is down nearly 80% from where it started the year and it recently made headlines for laying off one-fifth of its staff. The company posted a $430 million loss in the first quarter of 2022, underperforming Wall Street analysts’ expectations. Its trading volumes and number of monthly transacting users were both down from Q4 last year — bad news for a company that depends heavily on transaction fees for its revenue.

The exchange got over its skis quicker than even Coinbase itself probably imagined, a point evidenced by its decision to rescind job offers last month from candidates who had already accepted them. Its competitors, though, have been lying in wait for their moment to close in on the U.S. market. Now, sensing Coinbase’s moment of weakness, the two largest crypto exchanges in the world by volume (Coinbase is third globally) — Binance and FTX — are hoping to seize their opportunity stateside.

The three crypto giants all have different established customer bases and are trying to steal each other’s market share. Retail investors comprise around 95% of Coinbase’s transaction revenue, according to its latest quarterly filing. FTX, in contrast, already has a strong institutional trading business anchored in its founder and chief executive Sam Bankman-Fried’s background working at a quant hedge fund.

SBF, as he’s known in the crypto world, has been pulling out all the stops to gain retail customers, including introducing zero-fee U.S. stock trading in May, to try to turn FTX into a one-stop shop for the retail investor’s needs. After all, if Coinbase ascended to the No. 3 spot buoyed almost entirely by U.S. retail investors, its decline presents a valuable opportunity for global, institutionally focused exchanges to poach its users and boost their own trading volumes.

It makes sense, then, that Binance has its sights set on luring more retail investors, but the largest global exchange is still a bit of a dark horse in the race for the U.S. market as it battles against FTX for customers. Its Binance.US division saw spot trading volumes below $300 million as of July 12. That’s a drop in the bucket compared to its global business, which saw volumes of $10 billion for the same period — about seven times higher than volumes at both FTX and Coinbase.

Today, 70% of trading volume on Binance.US, the American offshoot of the global exchange, comes from institutional customers, its CEO Brian Shroder told TechCrunch in an interview. Still, retail investors bring in more revenue overall, in part because of the steep discounts Binance.US offers to its highest-volume customers, he added.

Binance is also taking a markedly different approach from FTX in luring U.S. retail investors, focusing on its core competency in crypto.

“Some exchanges want to go back to stock trading and target that market. That’s, again, not a wrong or right approach. We are a pure web3 company. We’re not going back; we’re moving forward. We want to build more web3 tools,” Binance founder Chanpeng Zhao told Decrypt in an interview this week.

The exchange is also taking a less flashy tack when marketing in the U.S. While other competitors including Coinbase, FTX and Crypto.com were spending millions of dollars on Super Bowl ads during the crypto bull run, Binance.US stayed relatively quiet.

Under Shroder’s tenure, Binance.US seems to be reversing its reputation, once marred by rapid management turnover and ongoing regulatory battles, and pulling ahead in the fight to win over the U.S. retail investor. From a customer perspective, its strategy is undeniably appealing — undercut competitors by offering lower fees.

Coinbase’s fees are notoriously high at up to 3.99% for certain spot trades compared to FTX.US, which charges up to 0.20%. Binance.US, meanwhile, reaffirmed its commitment to keeping costs low for its customers last month when it launched fee-free bitcoin spot trading for all users, saying it is the first U.S. crypto exchange to have done so, though it’s worth noting that exchanges still make money from the spread on trades even if they don’t charge an upfront fee. It also rolled out a staking product last month that it claims provides some of the highest APY rates compared to its competitors and said it plans to add fee-free trading for more currencies in the future.

“On the cost side, it is unquestionable that we are the lowest-cost provider in this space,” Shroder said.

When asked about how Binance.US is able to provide above-market yields from its staking product, Shroder’s response was: “My guess is that when you look at the other firms having much lower APYs, it’s just that they are taking that themselves, and we are passing it on to the customer.”

Naturally, investors gravitate toward lower fees and higher returns, giving the deep-pocketed Binance a potential advantage over Coinbase in that it can afford to sacrifice profits in the U.S. to attract users as long as it makes them elsewhere. The same goes for FTX, which is able to offer no-fee equity trading only because it’s making money in other parts of its business.

Customers have shown enthusiasm for Binance.US, although investors, at times, have seemed more hesitant. Still, this April, the company was able to raise its first external funding from investors in a $200 million round valuing it at $4.5 billion. The fundraise marked a crucial first step on its path to an IPO — a milestone Shroder told TechCrunch he sees happening in the next two to three years.

Armed with the new cash and an extension to the round that Shroder says is coming soon, the company seems well positioned to weather a choppy market. It is actively hiring for 80+ new roles to add to its current employee base of ~400, TechCrunch reported last month.

Binance.US CEO tells employees the company is ‘growing faster than ever’

“What I experienced at Uber, I’m living through again”

Despite Binance’s recent efforts in the U.S. market, its messy history with local regulators makes it easy to underestimate. The company is currently under investigation by the U.S. Commodities and Futures Trading Commission for allegations that it engaged in market manipulation. The U.S. Justice Department and IRS are also reportedly examining whether the exchange engaged in money laundering and tax evasion.

For context, Binance.US launched in 2019 as a standalone entity that licenses its branding and core technology from Binance itself. Zhao is said to have spun off the division in a bid to appeal to U.S. regulators who refused to greenlight the global exchange.

Zhao still wields significant influence over the U.S. exchange today as a major shareholder, although he told Decrypt this week that Binance “is no longer top-down driven” by him. The New York Times reported last August that Zhao held 90% of Binance.US shares.

Zhao’s ownership stake, according to the Times, became a sticking point with outside investors when former Binance.US CEO Brian Brooks tried to raise a venture round for the company as a step to an eventual IPO. Brooks ended up leaving the company just three months after taking over the top job, perhaps in part because the deal fell through.

Brooks isn’t the only top exec at Binance.US who has left unexpectedly. The company’s founding CEO, Catherine Coley, left the company so quietly last May that numerous unconfirmed rumors began swirling regarding her whereabouts. Last October, when Shroder took over the company as its next permanent CEO after Coley, Binance.US’s founding CFO Joshua Sroge made his exit. Last week, after nine months of searching, the company finally filled Sroge’s role, appointing former Acorns exec Jasmine Lee as its new permanent CFO.

In addition to its troubles in the U.S., Binance has also faced heavy regulatory scrutiny in Japan, the EU, Germany, Thailand and other regions. Shroder, who previously led Uber’s Asia-Pacific strategy, likened the exchange to the controversial ride-share startup.

“What I experienced at Uber, I’m living through again,” Shroder said. “When I was at Uber, we were bad boy No. 1, you know? We were the big bad guys picking on the taxi industry and hurting the taxi employees and things like that.”

“What was true about Uber is also true about Binance, globally, and then Binance in the U.S., which is that basically there was an entrepreneur who had an innovative approach to expanding technology that has never been contemplated by regulators,” he continued. “To support that, the regulators had to play catch-up to the technology, and I think that’s exactly what we’re experiencing now in the crypto space.”

Shroder is determined to shepherd Binance.US to its longstanding goal of going public, a milestone he believes it will achieve in the next two to three years. He said Binance.US is strong enough to continue growing even amid tough market conditions, citing the firm’s plans to hire some employees who were let go by Coinbase and competing crypto exchange Gemini as evidence that his company is better positioned for the challenges ahead.

“Coinbase and Gemini have multiple products and services, and they have them out there; they’ve been out there for a while. We historically have only had spot [trading] up until really this [quarter]. So as we add more products and services, which we have a very aggressive roadmap to do. We require more products and tech talent; we require more operations people to actually run those new business units. With the infusion of capital that we just got from our very first seed round, we’re taking all the funding, and we’re plowing it back into growth,” Shroder said.

Only time will tell if Shroder’s ambitious plan will work, but he is determined to reshape the narrative surrounding Binance.US in the public eye. One of the biggest misperceptions the public has about Binance.US, he said, is around its “desire to be a fully compliant and regulated entity,” a goal Shroder said has been central to the company since its founding.

“In the vacuum of you telling your own story, your story is being told by your competitors, or your story is being told based on your click rate. And to the extent that negative headlines drive views more than positive ones, I think that that just creates a misperception in the market that is not based on reality,” Shroder said.

Binance.US hires former Acorns, PayPal exec Jasmine Lee as CFO

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Deliveree is smoothing Southeast Asia’s bumpy logistics landscape

Logistics in much of Southeast Asia is not only complicated, but also expensive. Deliveree wants to solve that problem with a platform that not only lets clients book trucks, but also uses algorithms to determine the best route based on location, trucking loads and even the weather. The company announced today that it has raised a $70 million Series C led by Gobi Partners and SPIL Ventures, with participation from returning investor Inspire Ventures. This brings the company’s total raised so far to $109 million since it was founded in 2015.

The high cost of logistics means consumers end up paying higher prices, said founder and CEO Tom Kim. “The way we see the market is that number one, the inefficiency in trucking and cargo shipping has driven up costs materially. Imagine you’re in California, Los Angeles, and buying a pair of Nike shoes. What portion of that sales cost is spent on logistics and transportation and warehousing? The answer is very well-documented. It’s about 8%. If you buy those same Nike shoes in China, the answer is about 15%. And if you buy the same Nike shoes in Indonesia, Thailand or the Philippines, the answer is going to be much closer to 25%, maybe upwards of 30%.”

The company says that in the past 24 months, it has grown its gross transaction value by 3.2x and will exceed $100 million this year. It currently has 500 employees, and 100,000 drivers on its platform.

Deliveree is currently available in Indonesia, the Philippines and Thailand. It focuses primarily on large trucks that move commercial goods or large items. Kim said that based on Google Analytics, it gets more searched than other logistics companies. These include Waresix, Go Box, Kargo Tech and Logisly in Indonesia; Mober, Inteluck and TheLorry in the Philippines; and Giztik, TheLorry and Ezyhaul in Thailand.

Kim added that the logistics war is especially heated in Indonesia, where many logistics startups, like Waresix, have received funding.

“It’s where a lot of startups and disruptive technology in the space is being built, and it’s definitely a very active market,” he told TechCrunch. “There are all these well-known players, like Waresix or even Kargo Tech. The Philippines and Thailand are also interesting and great markets, but there are less players in the logistics space, especially cargo, trucking and freight.”

One of the problems that Deliveree solves is inefficient use of trucks. For example, trucks deliver a load of goods, but then return empty to the warehouses. If it’s part of Deliveree’s system, however, companies can book it to ship goods on its way back. That makes better use of the money spent on fuel, time and dispatch teams.

“There are an awful lot of empty trucks driving around in Thailand, the Philippine and Indonesia, because everyone has their own corporate fleets,” said Kim. “They do one-way delivery and the truck drives back empty. It’s even that way for long-distance deliveries, when you’re sending goods from one warehouse to some kind of facility in an other city. The same thing happens—you send the truck full one way and it comes back, sometimes hundreds of kilometers, empty.”

Deliveree solves these problems with a dynamic marketplace, that Kim says currently has tens of thousands of customers and vendors, including a combination of independent drivers and trucking companies. The marketplace’s technology, combined with its volume, can identify customers both ways on a truck’s journey so it rarely travels empty. The marketplace aggregates demand and determines optimal routes so trucks remain full. Kim said that before Deliveree came along, a 40% to 50% utilization rate was considered above average. With Deliveree’s marketplace, however, trucks can achieve up to a 80% utilization rate, thanks to Deliveree’s internally-generated data set, which is has been working on for five years.

“Even though it’s far from perfect, it gets smarter everyday because we do thousands of bookings every day, and it can make more accurate forecasts about the duration of the booking, the day of the week, the time of the day, even the weather. These are all things that have drastic impact on durations,” Kim said.

This also means warehouse has shorter waiting queues, because Deliveree’s algorithms can predict what loading and waiting times will be.

Most companies have their own fleets, which means hiring dispatch teams, admin teams, security teams, parking lots and security guards. This is still the prominent way it’s done, said Kim, and means a lot of overhead for companies. Kim said his argument when pitching Deliveree to companies is that they can de-leverage their balance sheets and book trucks on an asset-light basis like. That means they only pay for trucks when they need them. When the pandemic happened, revenue for many companies went down, and Kim said that led to more adoption of Deliveree as they tried to increase revenue. This increased adoption of Deliveree, as more companies tried to find ways to save money, to convert their fixed costs to variable costs.

Deliveree monetizes by charging a fee to the customer and splitting it with the carriers. Deliveree’s standard ratio is 80% to the independent trucker or trucking company, and a 20% commission for the company.

In a prepared statement, Gobi Partners managing director Kay Mok said, “Post-pandemic, we are moving into an inflationary environment plagued by supply chain issues. Deliveree has built the best tech platform for customers and this will enable them to optimize and lower total cost of operation for the logistics and shipping company.”

We turned our investors into our best source of customer feedback

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Is consolidation on the horizon for Southeast Asia’s tech industry?

Amit Anand Contributor
Amit Anand is a founding partner of Jungle Ventures and an early pioneer and leader in the development of Southeast Asia’s venture capital industry.
More posts by this contributor

The recent IPOs of several tech companies in Southeast Asia might give investors cause to wonder if the time is ripe for exits and consolidation in the region.

If you’re thinking along those lines, you aren’t far off from the truth. An analysis of recent changes in the market reveals four factors that are set to catalyze consolidation in Southeast Asia in the near future.

Startups have cash and are looking to spend it

After fundraising multiple times, there are a number of large and late-stage tech startups that have ample liquidity and are increasingly open to pursuing growth inorganically.

As more tech companies look to the super app business model to retain users and increase monetization, we could expect more inorganic expansion and consolidation in the coming years.

Recent M&A in the region indicates two key strategic considerations influencing acquisitions:

  • Adding new product segments/verticals or markets into offerings.
  • Strengthening their existing offerings (verticals or markets).

For instance, Grab acquired Singapore-based robo-advisory startup, Bento, in 2020. The acquisition was mainly driven by the strategic consideration of adding a new product segment, because it helped Grab bring retail wealth management and investment solutions to its users and partners.

The acquisition of the Singapore-based home renovation platform Qanvast by Livspace in 2021 is an example of the second strategic consideration. This acquisition helped Livspace strengthen and consolidate its position in existing markets (Singapore and Malaysia).

We’ve summarized some more examples of strategic acquisitions below:

Image Credits: Jungle Ventures

As cash-rich tech startups become keener to seek inorganic growth, consolidation is likely to pick up.

Companies are expanding across regions and countries

Southeast Asia is culturally diverse and countries here are different from each other despite their geographical proximity. The region has 11 countries with a wide range of cultures, ethnicities, languages, religions, economic development status, etc., which give rise to very different consumer behavior and market characteristics.

As tech companies from neighboring countries and regions expand into Southeast Asia, the region’s diversity and differences pose challenges to their expansion, since each country likely requires a unique greenfield approach.

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In Southeast Asia, a booming crypto scene

Southeast Asia, a diverse region with an expanding population and rising income, is emerging as a popular destination for crypto entrepreneurs and investors hunting down high-growth startups in the space.

More than 600 crypto or blockchain companies are now headquartered in Southeast Asia, according to a new report by venture investment firm White Star Capital. Much of the recent growth in venture capital funding across the region has stemmed from crypto, blockchain, and web3 startups, which drew in almost $1 billion in funding just in 2022 to date and are on track to surpass the $1.45 billion total in 2021, says the report.

Investors from all over the world are drawn to the region’s vibrant web3 scene, with those from the US, China, and Singapore being some of the most active ones, the report shows.

While much of the deep, fundamental research and infrastructure development in the blockchain space still takes place in the US, Southeast Asia is ideal for web3 startups offering consumer-facing services, Amy Zhao, lead at crypto investment firm Ocular, told TechCrunch.

“The demographics of Southeast Asia are very favorable for web3,” said the investor. “[It has] young populations who inherently understand the technology and are more willing to try new things. It’s [mostly] developing economies, so the financial aspect of crypto provides a lot of incentives for people to participate.”

Southeast Asia, with nearly 700 million residents, has one of the world’s fastest-growing populations. 480 million of them are active internet users and more are coming online. By 2040, Asia is estimated to make up half of global GDP and 40% of global consumption, with much of it coming from the ten-member Association of Southeast Asian Nations (ASEAN), a report by Pinebridge Investments found.

Much like other developing countries, large swathes of the population in Southeast Asia still have limited access to banking services despite the region’s great strides in financial inclusivity over the decade. More than 70% of the adult population remained “underbanked” or “unbanked”, according to a 2019 report from Bain & Company.

The lack of access to formal banking, in turn, gives room for alternative crypto-related finance to grow. Decentralized finance, or DeFi, has flourished in the region as it uses distributed ledger technologies to process transactions and promises to let users earn yield and gain access to capital without the cumbersome of traditional financial intermediaries. Blockchain games that let users earn money by playing (GameFi) are also popular, such as Vietnam-based Sky Mavis’s Axie Infinity, which has large followings in the Philippines and Indonesia.

Crypto adoption rates in Southeast Asia averaged 3.56% in 2021, but Singapore stood out with nearly 10% of its population owning crypto, ahead of the US at 8.3%, according to White Star Capital. In terms of DeFi adoption, Vietnam and Thailand were only after the US in 2021, Chainalysis found.

Each country in the region has its slight edge in crypto innovation, observed Zhao. Vietnam is a source of “hardcore engineers” whereas the Philippines loves entertainment. Thailand, on the other hand, has a vibrant financial market. Singapore is likely to produce more SaaS products given its pool of international talent.

Indonesia is “catching up” on web3 probably because the huge talent pool still rests in their web2 industry,” the investor said. But the country is also home to one of the most well-funded blockchain firms in the region — crypto trading platform Pintu, which brought in over $110 million from its Series B round recently.

It’s not just homegrown entrepreneurs courting Southeast Asia’s web3 adopters. Having spotted the region’s appetite for blockchain services, New York-based crypto exchange Gemini announced a roadmap to enter the region last year. San Francisco’s Coinbase had plans to hire in Southeast Asia as part of its global expansion before freezing recruiting amid the current market downturn.

Asides from consumer demand, Southeast Asian countries like Singapore also attract entrepreneurs with their relatively open-minded attitude toward crypto, which is largely banned in China and has come under growing regulatory scrutiny in the US.

“Singapore has always been very pragmatic. The regulations might not seem to be as lenient as say Dubai, which has attracted a lot of large exchanges to move there from Singapore. But Singapore’s approach has been to build up more trust in the long run to protect consumers here,” Zhao reckoned.

In January, the Monetary Authority of Singapore (MAS), the city’s state’s financial regulator, said that the trading of digital payment tokens or cryptocurrencies is highly risky and thus should not be promoted to the public.

“And in terms of innovation, it’s very supportive, such as setting out regulatory sandboxes,” the investor added.

For instance, MAS has worked with the industry to build a blockchain-based payments network. Temasek, the sovereign wealth fund of Singapore, has been an active investor in crypto startups, backing companies like crypto asset management unicorn Amber.

“We expect regulators in [Southeast Asia] to continue developing their regulatory frameworks that govern digital assets in the coming years. ‘Sudden-stop’ regulations look less likely as digital asset adoption rises, as it would put brakes on a vibrant sector with future prospects,” White Star Capital writes in its report.

Southeast Asian startups to watch in 2022

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Thailand’s Salary Hero is an earned wage access startup that plans to become a neobank

Salary Hero wants to provide lower-income Thai workers with more financial flexibility. The startup, which focuses on earned wage access and finance education, with plans to add neo banking products, too, announced today it has raised $2.8 million. The funding included participation from Global Founders Capital, M Venture Partners, 500 Global, 1982 Ventures, Titan Capital and Thai corporations and angel investors.

Salary Hero was founded in late 2021 by former Bain & Co. Bangkok executives Jonathan Nohr and Prabhav Rakhra. Both were also former bankers at Credit Suisse and Barclays. Other members of the founding team include Tep Neeranatpuree former head of corporate sales at Lalamove, and Thanakij Pechprasarn, former CTO at edtech startup Gantik.

Thai earned wage access startup Salary Hero's team

Salary Hero’s team

Rakhra said that while working at Bain, he and Nohr focused on financial services engagements. “With our common backgrounds both being in investment banking, and while working on strategy cases for various banks in Southeast Asia, we experienced how banks continuously de-prioritize lower income customer segments,” he told TechCrunch. That is because they aren’t as profitable as affluent demographics. As a result, Rakhra added, lower-income customers end up paying more than wealthier individuals for the same basic financial services.

“It seems fundamentally wrong that people with fewer means should pay more for financial services, if they have access at all,” he said. “We saw an opportunity to use technology to help level the playing field in Thailand and Southeast Asia.”

By being able to access their earned wages on demand, workers are able to better handle emergencies and unforeseen expenses, instead of being forced to borrow from lenders who charge 10% to 30% interest per month, Rahkra said. “These compounding rates lead to cycles of debt that are very hard to break free from,” he said. “Additionally, financial uncertainty and a lack of a financial safety net creates a lingering feeling of insecurity, and is the main cause of mental stress among workers.” He added that 80% of Thai workers who make less than $1000 USD a month have used loan sharks at some point.

The company says it has seen double-digit week-on-week user growth in 2022 among its clients in the manufacturing, logistics, hospitality and retail sectors. Salary Hero works with companies with as little as 100 staff members on their payroll, but their initial focus is on companies with a full-time headcount of between 500 to 50,000. Rakhra said that by addressing the financial needs of their workers, companies are able to improve employee satisfaction and reduce turnover in a competitive labor market. The company monetizes by charing a low access fee for its earned wage access, but does not charge interest or other hidden fees, Rakhra said.

In the future, Salary Hero plans to add neo banking products, including at-source savings accounts, insurance products, remittances and other financial services like micro-investments and debt restructuring advice. These other products will go live in 2023, while Salary Hero’s earned wage access and financial education features are already live.

In a prepared statement, M Ventures Partner CEO Mayank Parekh said, “We’re proud to be backing Salary Hero, supporting their innovative solution for employers to differentiate themselves in an increasingly competitive labor market. The future of payroll is one where we say goodbye to traditional pay cycles. Salary Hero empowers workers, and at the same time, solves immediate challenges for employers-driving retention, recruitment and productivity of their workers.”

How to improve retention, growth marketing’s golden metric

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Metaverse app BUD raises another $37M, plans to launch NFTs

BUD, a nascent app taking a shot at creating a metaverse for Gen Z to play and interact with each other, has raised another round of funding in three months.

The Singapore-based startup told TechCrunch that it has closed $36.8 million in a Series B round led by Sequoia Capital India, not long after it secured a Series A extension in February. The new infusion brings BUD’s total financing to over $60 million.

As with BUD’s previous rounds, this round of raise attracted a handful of prominent China-focused investors — ClearVue Partners, NetEase and Northern Light Venture Capital. Its existing investors GGV Capital, Qiming Venture Partners and Source Code Capital also participated in the round.

Founded by two former Snap engineers Risa Feng and Shawn Lin in 2019, BUD lets users create bulbous 3D characters, cutesy virtual assets and richly colored experiences through drag-and-drop and without any coding background.

The company declined to reveal its active user size but said its users have created over 15 million custom experiences i.e., virtual spaces with gameplay that others can join since the app launched in November. Virtual assets, including costumes and accessories that users design for characters, have changed hands more than 150 million times on BUD’s marketplace.

These transactions are clearly a promising way to generate revenues, but BUD is not charging commissions for now. Nor has it started monetizing in other means via the app.

Perhaps partly due to its free-to-use and ad-free nature, the app has been among the top 10 social apps in nearly 40 countries across North America, Southeast Asia and South America. It’s currently the top free social Android app in Thailand and Vietnam, according to market intelligence company SensorTower.

Apps like Roblox and South Korea’s Zepeto have also made it easier for anyone to design virtual characters and spaces. BUD is taking the user experience a step further with plans to introduce a marketplace for non-fungible tokens (NFTs). That means the ownership of virtual items sold on BUD will be recorded on the blockchain. Reselling of digital assets will likely become possible in the form of NFTs, of which authenticity and provenance can be more easily verified.

BUD declined to disclose which chain the NFT project will be on or what tokens it will use, but said the marketplace will “soon be live.”

“While BUD makes 3D content creation possible for mainstream Gen Z consumers, we will continue to bring blockchain to mainstream consumers and allow our creators to truly own and monetize their creations,” said Lin in a statement.

The company is quickly expanding and has a team of 130 employees spread across its headquarters in Singapore as well as its offices in Shenzhen and the U.S.

3D social network BUD raises $15M in Series A+ round

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Why a bipartisan embrace of crypto might never extend to Bitcoin

Hey everyone, and welcome back to Chain Reaction

In our Chain Reaction podcast this week, Anita and I chatted with Sequoia Capital’s Shaun Maguire on why gamers are skeptical of NFTs and where decentralization really matters. More details below.

Last week was our inaugural newsletter and we chatted at length about the changes Twitter could make to expand its crypto business. At that point, I — like many others — was operating under the assumption that a Musk Twitter deal was ultimately doomed, but low and behold we’ve got a deal. Everything has been approved at this point, but I can’t shake a feeling that something is going to kill this deal in the eleventh hour. If that happens, Twitter’s board or Musk will be on the hook for a $1 billion penalty for walking away from the deal, but I suppose we’ll see… This week, I’m looking at a controversial Bitcoin mining ban working its way through New York regulators and what bills like it could mean for the political reputation of crypto’s #1 coin.

To get this message in your inbox on Thursday mornings, you can subscribe on TechCrunch’s newsletter page. Follow me on Twitter while you’re at it!

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the hottest take

Crypto’s biggest skeptics see plenty of reasons to criticize the industry, but generally at the heart of most complaints is a belief that crypto is contributing very little to society while burning massive amounts of energy.

While crypto’s believers could squabble over the former point until they’re blue in the face, the latter is a little harder to deny. Bitcoin uses an estimated 204.50 terawatt-hours (TWh) of electricity per year at current rates according to the oft-cited tracker built by Digiconomist, this number is equal to the power consumption of Thailand. Meanwhile Ethereum’s energy footprint is half the size but still comparable to the power consumption of Kazakhstan. In 2018 the United States reported its total consumption of electricity as 4,222.5 TWh.

For some legislators, those numbers are hard to swallow. This week, the New York State Assembly passed a bill that had team crypto up in arms. The bill blocks the formation of crypto mining firms in the state that rely on non-renewable power. It notably doesn’t apply to existing facilities. A corresponding bill is currently making its way through the Democrat-controlled state senate.

This is fascinating for a whole bunch of reasons.

For one, crypto is increasingly becoming a partisan topic. Republicans are typically wary of regulating unregulated industries and thus a number of major figures in the party have thrown their full support behind crypto with few concessions. This includes prospective future party leaders like the governors of Texas and Florida. Meanwhile, most of crypto’s most ardent critics appear to be Democrats, but that’s not to say it’s a party-line issue. President Biden’s recent cryptocurrency executive order was generally regarded as very friendly to the space by industry insiders. The energy usage seems to be the most salient sticking point for many regulators looking at sweeping bans.

How Texas is becoming a bitcoin mining hub

The other reason that this is interesting is that this bill really only impacts a handful of major crypto networks, but that includes the two biggest ones — Bitcoin and Ethereum.

These networks use something called a proof-of-work mechanism to secure their networks. The work in this case is mining which involves computers working around the clock to essentially solve math problems which are protecting the integrity of the blockchain, making it extremely expensive and technically challenging for hackers to overwhelm the network to make unauthorized transactions and steal tokens. Crypto seems to be generally trending away from proof-of-work, most notably, Ethereum is deep in the process of transitioning its network towards a less energy intensive consensus method. But Bitcoin seems unlikely to make its own transition, suggesting that regulatory maneuverings, like New York’s bills, are likely going to be increasingly antagonistic towards Bitcoin (and a few smaller networks) specifically.

This could lead to an interesting scenario where the crypto industry increasingly finds mainstream tolerance among its current critics but Bitcoin finds itself growing more and more politically isolated.

Bitcoin already broadcasts its libertarian bent a bit more prominently than other blockchains. At recent industry events, it’s becoming clearer that amid a burgeoning developer ecosystem for blockchains like Ethereum and Solana, the philosophy of the Bitcoin network’s infrastructure is increasingly its most harmonizing element. Bitcoin’s continuing resistance to criticism and calls for change may only embolden its supporters, but critiques around the power consumption of the network aren’t going anywhere and further adoption may only make this a more visible target for aggressive regulation.

Some politicians may grow to love crypto but hate Bitcoin all the same.

Bitcoin miners say energy efficiency and regulatory certainty are crucial for the industry’s success

this week’s pod

Hey y’all, it’s Anita here. Our second episode of the weekly Chain Reaction podcast just dropped, and this week, we’ve been so immersed in the Elon Musk/Twitter news that we thought we’d tackle two other topics first to get our minds off the bird app for a second.

I wrote earlier this week about how Fidelity, the largest retirement plan provider in the United States, announced its plans to bring bitcoin to the 401(k) plans it administers for 23,000 companies. It’s a bold move from this tradfi incumbent because it legitimizes crypto as a long-term investment just a month after regulators tried to discourage retirement plan providers from doing exactly this. We kicked off the podcast with some spirited back-and-forth about who will benefit from Fidelity’s move, especially if it takes off as a larger trend. Personally, I think the news is great for non-billionaires – you can read about why in my latest for TC+ here.

We also covered:

  • Coinbase CEO Brian Armstrong throwing shade at Apple for their App Store policies
  • Elon Musk’s bid for Twitter and what it means for web3. We just couldn’t skip this one, especially because of Twitter’s position as a watering hole for the crypto community

Our guest interview this week was with Shaun Maguire, an investor at Sequoia and, of course, a crypto Twitter personality. We chatted with him about Sequoia’s recent crypto moves, the possibility of a multichain future, and whether we’ll ever reach true decentralization at a mass scale or will end up stuck in “web 2.5” forever.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week. Follow Chain Reaction on Twitter.

— Anita Ramaswamy

follow the money

Where startup money is moving in the crypto world:

  1. P2P exchange 0x nabs $70 million from Greylock Partners
  2. NFT startup Proof gets $10 million from Alexis Ohanian’s 776
  3. Crypto TV startup Mad Realities scores $6 million from Paradigm
  4. African crypto app Afriex nabs $10 million from Sequoia China and Dragonfly Capital
  5. Gaming DAO Snackclub raises $9 million from Animoca
  6. DeFi platform Tonic gets $5 million from Electric Capital and Move Capital
  7. Cricket NFT platform Rario raises $120 million from Dream Capital
  8.  NFT game Apeiron nabs $10 million from Hashed
  9. NFT infrastructure co CXIP Labs gets $6.5 million from Courtside Ventures and Wave Financial
  10. Crypto banking startup Cogni scores $23 million from Hanwha Asset Management and CaplinFO

added analysis

Some more crypto analysis from our TechCrunch+ subscription service:

Stablecoins are here to stay, but will they see wider adoption?

Stablecoins’ total circulating supply has grown significantly over the past year, but the future of it is unclear. Kraken’s chief legal officer said the subasset is in a “Cambrian moment” as they gather their foothold in the market. But not everyone is a fan of stablecoins as they’re in nascent stages and have the potential to boom, in two very different ways.

Artists like Harry Connick Jr. are using web3 to engage with fans

Web3 has attracted people from all walks of life, from traditional finance analysts to software developers. But a fairly new group has been entering the space over the last 12 months: artists. While there are financial incentives, some are saying that these creators are deep diving into web3 for more than just a new revenue stream.

– Jacquelyn Melinek

Thanks for reading! And, again, to get this in your inbox Thursday mornings, you can subscribe on TechCrunch’s newsletter page.

Have a great weekend,
Lucas Matney

Posted on

Ant Group buys Singapore’s 2C2P to further global payments ambitions

Quietly, Alibaba’s fintech affiliate Ant Group has been building a global cross-border payments network by partnering with or investing in third-party e-wallets, banks, remittance services and other ecosystem players.

The latest added to Ant’s alliance is 2C2P, a Singapore-based company that helps enterprises in Southeast Asia move money across borders. According to an announcement released on Monday, Ant will form a strategic partnership with 2C2P and become its largest shareholder, though a figure for the acquisition wasn’t disclosed. With the deal, the Singaporean firm’s network of merchants will be plugged into Alipay+, Ant’s cross-border payments platform.

“Through this complementary partnership with Ant Group, 2C2P will be connected to a much larger merchant base and be well-positioned to advance our international expansion strategy,” Aung Kyaw Moe, founder and CEO of 2C2P, said in a statement, adding that the partnership will help extend the company’s “current 250 payment options” to include more e-wallets and payments methods.

Rather than building its own country-specific wallet from the ground up and acquiring the needed regulatory permits to operate such services, Ant has chosen the route of partnership. It launched Alipay+ in 2020 and has so far teamed up with a slew of third-party payment methods, including banks and also e-wallets like Touch ‘n Go in Malaysia, GCash in the Philippines, KakaoPay in South Korea, TrueMoney in Thailand, Dana in Indonesia, bKash in Bangladesh, and Klarna in Europe.

Alipay+ comes in handy when a user traveling, working, or studying abroad wants to pay a local merchant, whether it’s online or offline, in their home country’s currency. If the retailer supports an e-wallet that works with Alipay+, the user can pay using Alipay+’s partnering wallet for the transaction, skipping the hassle of exchanging currency at a bank.

Alipay+ also comes with a suite of marketing tools that allow merchants to offer deals and discounts for customer engagement, a business model that it has proven in China’s mobile-first payments market over the years.

The fintech giant has long had globalizing goals and set out years ago by targeting China’s outbound tourists. While Alipay focuses on China’s domestic consumers and merchants, its sister Alipay+ appears to be Ant’s ambition to go after users outside China who have similar cross-border payments needs.

Ant’s plans to pursue an initial public offering were shelved in November 2020 after the Chinese government ordered a regulatory overhaul into its financial practices, which subsequently made some of its China-based businesses less lucrative. Ramping up overseas expansion could be a way for the behemoth to sustain growth.

Ant says Alipay+ has served more than 1 billion users in Asia and 1 million offline merchants across Europe and Asia. Online, it has connected payments providers to customers on platforms like Apple, Foodpanda, Google and TikTok.

Sequoia-backed SwooshTransfer raises millions of dollars to automate cross-border payments

Posted on

Tech talent flees Russia as Western sanctions bite

Russia is seeing an exodus of entrepreneurs, computer programmers, as well as other educated middle-class citizens as Western sanctions and political instability make it impossible to run an international business in the country.

Russia’s invasion of Ukraine has forced millions to flee their homes fearing for their lives. But the war is also leading to Russians moving from their home country. I spoke to a number of Russian entrepreneurs and venture capitalists who shared why they have left or are in the process of leaving their homeland. But as they try to start anew abroad, anti-Russia sentiment and economic sanctions are set to haunt them.

The triggers

As Russia continued to amass troops at the Ukrainian border in mid-February, Eugene Konash, who had staff in Russia working remotely for his London-based gaming studio Dc1ab, became increasingly worried. But like many others, he didn’t expect a full-scale invasion.

His hopes of tensions fading soon evaporated. When it became clear Russia was waging a full-on war on Ukraine, Western countries began slapping sanctions on Russia. Businesses felt the impact right away.

One of Konash’s employees found their bank hit by sanctions, blocking international transfers to his account. As the rouble collapsed, long queues formed outside banks in Russia as citizens scrambled to convert their savings into dollars — only to find hefty fees and the government restricting access to foreign currency.

The tipping point for Konash came when investors told him in no uncertain terms that his startup would be uninvestable if it continued to have such a heavy presence in Russia. His Russia-based team agreed it was time to leave.

“The guys that even a month ago said they wouldn’t leave Russia under any circumstances were talking about grabbing their things and literally driving to Kazakhstan to cross the land border because the tickets to get out were either sold out or were super expensive,” said Konash.

Like many tech firms with an international footprint, Konash’s gaming startup hires developers across Eastern Europe for the region’s affordable and quality programmers. Originally from Belarus, Konash knows well that the former Soviet bloc nations’ emphasis on science and math education has helped a world-class engineering and scientific workforce to flourish.

Financial sanctions aside, it became impractical to operate an information technology company from Russia as foreign tech services are either banned or begin to retreat.

Google and Microsoft have suspended all sales in the country, while Russia has attempted to block Facebook, Instagram, and Twitter, albeit with mixed results. Some users could still access these American platforms following the bans, suggesting that Russia may be some way away from having a robust censorship machine like that of China. Facebook and Twitter said they were working to restore services in Russia.

“Who knows when development tools like Unity may be blocked?” said a Siberia-born gaming investor who left the country following the 2015 Crimea annexation and subsequent economic sanctions by the West. “No one wants to end up in a country with no access to the outside world.”

The investor declined to be named fearing the Russian government’s crackdown on dissenters.

Half foot out

After the invasion of Crimea seven years ago, many Russian-built companies began to incorporate elsewhere in a bid to placate investors with qualms over the political risks and optics associated with backing Russian companies. Before, many of these firms were operating outside the country merely on paper, with their teams often entirely still based in Russia. But the full-scale invasion of Ukraine has turned a trickle into a flow.

“After 2015, companies were drifting out of Russia legally,” observed an investor at a venture capital firm that recently moved its Moscow team out of the country. Even before the Ukraine crisis, the firm would only back a Russia-based startup if it was incorporated outside the country and had an international focus.

“Physically, these startups would still be based in Russia. They’d conduct R&D there because the cost of living was low,” said the investor, who asked for anonymity because the topic is “highly sensitive” for the firm, which has been trying to distance itself from Russia.

Life as a startup incorporated overseas but operating for all intents and purposes in Moscow itself sounded pretty breezy up until recently, said Nikita Blanc, who four years ago changed his last name from Akimov. His company Heyeveryone, which is building a tool to automate investor relations management, is in the process of incorporating in Delaware.

Nikita Blanc’s team working in Moscow before leaving the country following Russia’s invasion of Ukraine

The startup never intended to serve the Russian market alone, but Blanc and his wife picked Moscow as a base for the obvious perks: their parents could help take care of their three-year-old daughter; the country’s internet was speedy, cheap, and free at the time; and Moscow was teeming with tech meetups where Blanc found like-minded founders.

The escape

The Blancs’ entrepreneurial life enjoying the best of both worlds ended abruptly with Russia’s attack on Ukraine. Three days into the invasion, Nikita’s wife Valentina was lying in bed, devastated from seeing her country fall apart. She decided it was time to leave.

“I couldn’t do anything at work. Part of my family is from Ukraine,” she said. “It would be hard to leave with a child, but I didn’t think the situation would change. So we each packed 23 kilos of luggage and bought a one-way ticket.”

The couple moved with their young daughter to Georgia, one of the top destinations for Russia’s current talent outflow. It is a popular choice of country, along with Turkey, Armenia, Kazakhstan and Thailand, which are relatively affordable and easy to enter for Russians.

The venture fund that recently left Moscow has been extracting hundreds of Russian citizens, mostly its own staff and portfolio companies, out of the country in the past few weeks. Across the internet, Telegram groups with tens of thousands of Russians discussing exit plans and helping each other out have mushroomed.

‘We Russians are fucked’

The would-be émigrés have to make escape plans on the fly as sanctions against Russia intensify on a daily basis: Which countries are still taking Russian flights, and how will they move money around?

Sanctions continue to impact Russians after they have fled abroad and even those who left long ago. Notable financial infrastructure providers like PayPal, Mastercard and Visa have already suspended operations in Russia, which means expatriates using Russian banks are not able to use their cards overseas. Estonia recently suspended e-residency applications from Russian and Belarusian citizens to “prevent sanctions evasion and possible illegal activities.” European Union regulators have reportedly told some banks to scrutinize transactions by all Russian clients, including EU residents.

The breadth of this wave of sanctions is prompting some to let go of their Russian passports. The Siberia-born gaming investor is seeking Singaporean citizenship, fearing that their Russian nationality might cut them off from the US dollar-based financial system.

“Ukrainians are accepted as refugees around the world, but we Russians are fucked,” the investor lamented.

Others are betting that cryptocurrency can help them circumvent sanctions, such as the Blancs, who put a large chunk of their assets into crypto five years ago. Konash, the gaming entrepreneur, expected Bitcoin and Ethereum to be the last resort for cross-border payments if his staff get stuck in Russia for any longer.

While major exchanges like Binance and Coinbase have stopped short at imposing blanket bans on all Russians, they have abided by sanctions to block target individuals. Binance’s CEO maintained that crypto is not a likely escape route because transactions are recorded on publicly available ledgers, and hence easy for governments to trace.

But EU regulators continue to argue that sanctions imposed on Russia and Belarus extend to all crypto assets, and US lawmakers have urged the Treasury to ensure Russia cannot use crypto to evade sanctions.

‘Calm is the new currency’

Those who leave Russia face the obvious difficulty of being away from family and friends staying behind, but even greater anguish comes from the difference in their perception of recent events.

“Our parents and older relatives keep telling us to go back, saying ‘everything is okay here. Russia is great,'” Blanc said with an incredulous but sad note.

These educated, freedom-seeking Russian tech workers won’t likely look back. The Russians I spoke to, who are either leaving the country or helping others escape, were surprisingly calm as they recounted the woes of their country, in part because they have been mentally prepared for the inevitable farewell.

“Our investor SOSV taught us to be like cockroaches, be flexible and adapt to new environments as entrepreneurs. This philosophy is now helping us go through these uncertain times,” said Valentina Blanc. “Calm is the new currency.”

Émigrés like the Blancs might well be the last wave of Russia’s chronic brain drain, stretching back decades.

“The thing that gets me is that if you look at all the fantastic engineering and scientific talent that was produced in the Soviet Union and Russia — most of it has been leaving the USSR world at every opportunity,” said Konash.

“Who does that leave in the post-USSR world? For me, this last wave of the brain-drain is the death knell of the education and cultural scientific tradition that is probably one the few positive things to come out of the Soviet Union.”